Fundamental Analysis

ETF Battles: IJR vs. IWM – Which Small Cap ETF is Better?

This is an excerpt of ETF Battles between IJR vs. IWM on ETFguide TV – it’s an arm wrestle between two U.S. small cap stock ETFs.  Who wins the battle? IJR and IWM go against each other in key areas, including cost, performance and a mystery category Both funds own small company stocks but with …

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ETF Battles: XLE vs. ICLN Who Wins?

This is an excerpt from ETF Battles on ETFguide TV between XLE vs. ICLN – two beaten up energy ETFs with very different goals. Who wins the battle? Energy ETFs were pulverized during the first quarter along with the rest of the broader stocks market.  And the collapse in oil prices and energy stocks has …

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Is Sector Performance Following History?

It’s been said the more things change, the more they stay the same. And right now, the performance of stock market industry sectors is behaving right in line with that view. During the first quarter, the total U.S. stock market (NYSEARCA:VTI) rose almost 6% in value. Driving the stock market’s strong start has been bullish momentum …

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Energy Sector Crushes Conventional Wisdom

Never mind the abysmal results of first quarter earnings for the depressed energy sector. It doesn’t matter. And never mind the conventional wisdom of group-think and scary analyst warnings like,  “Energy stocks are in deep trouble because Q1 losses will mark the first time any sector in the S&P 500 has reported an aggregate loss since …

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Is a Liquidity Crunch in the Solar Sector Ahead?

Stocks in the solar and alternative energy space are getting crushed. Will it lead to a liquidity crunch? Since the beginning of the year, the Guggenheim Solar ETF (NYSEARCA:TAN) has lost a stunning 21.80% in value compared to a +0.20% gain for the SPDR S&P 500 ETF (NYSEARCA:SPY).  And while a 21.8% loss is most …

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Assets Flood to Europe

How did market participants react to the ECB’s 1.1 trillion euro QE-styled asset purchase plan? By pouring money into European stocks. Europe focused stock ETFs (NYSEARCA:VGK) collectively raked in 65% of all global ETP asset flow last week, gaining just over $4 billion in new assets. (Audio) Listen to Ron DeLegge @ The Index Investing …

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What’s the Proper Way to Measure Your Portfolio’s Performance?

Have you ever wondered why mutual funds that have 80% of their exposure to U.S. stocks (NYSEARCA:SCHB) and the other 20% to international stocks (NYSEARCA:EFA) are still measuring their performance versus the S&P 500 (NYSEARCA:VOO)? Shouldn’t they be using a blended 80/20 passive benchmark to do a proper apples-to-apples measurement? Why don’t they do this? …

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Experts Get the Gold Market Wrong (again)

Two questions: How wrong have experts been about the gold market this year? And how much money has their bad advice cost people? Let’s tackle the first question, by extracting and analyzing some recent headlines: “Gold Miners Fail to Launch” – Forbes, 5/14/14 “Gold Vulnerable to Manipulative Selloff in June” – Max Keiser, 5/30/14 “Why …

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Don’t Make These Widespread Mutual Fund Mistakes!

“People should only buy mutual funds with experienced portfolio managers that have good long-term track records.” “Investing in highly rated mutual funds with at least 4 or 5 stars is a sure-fire way to choose the best fund.” “Our firm screens thousands of mutual funds to help our clients find funds and managers that have …

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Gold and Silver Bars

How to Print Money in the Psychotic Gold Market

The gold market is the epitome of human psychosis.* On one hand, there’s the anti-gold camp that have utter disdain for precious metals 24 hours a day, eight days a week. On the other hand, there are the survivalist types, general goldbugs, and anti-Fed clan who live, breath, and eat gold at any price. Together, …

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Industry Sectors

3 Industry Sectors Vital to the Stock Market’s Health

Performance divergences, especially in key industry sectors, are either supportive or non-supportive of the broader stock market’s move. Although the S&P 500 (SNP:^GSPC) and Dow Jones Industrial Average (NYSEARCA:DIA) have notched new highs this year, small cap stock ETFs linked to the Russell 2000 (NYSEARCA:IWM) and S&P SmallCap 600 (NYSEARCA:IJR) continue to lag. The fact …

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2 Times When Diversification Becomes Di-Worsification

Diversifying your investment portfolio: It’s a dull exercise that people repeatedly hear, yet a chore they execute with consistent imprecision. Are there times when diversification can actually become “Di-Worsification”? Variety is the Secret Diversification boils down to spreading your investment risk across multiple asset classes. It works because of something called “covariance,” which basically means …

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Do Regulators Encourage Market Manipulation?

The latest episode of stock market cheating by high-frequency traders (HFT) has set in, yet unanswered questions remain. Do regulators like the Securities and Exchange Commission (SEC) encourage market manipulation? Manipulation refers to the dishonest activity by individuals or institutions who try to game the price of a stock (NYSEARCA:IVV) or a certain market for their …

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Corporate America’s Late Cycle Behavior

The pace of U.S. merger and acquisition (M&A) activity has erupted. Bankers and lawyers love it because it gives them work. And investors of the targeted companies love it so long as the buyout premium hovers between juicy and ridiculous. What does the velocity of M&A deals tell us about the state of the stock market? During the …

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Financial Geek

Stock Prices Are Cheap! Valuation Geeks Get it Wrong Again

“Stocks are cheap by historical standards” is the latest fiction being promoted by valuation geeks. Is it true? Meb Faber, proprietor of the Cambria Global Value ETF (NYSEARCA:GVAL), and a valuation guru tweeted the 5-year CAPE ratio for the usually frothy technology sector (NYSEARCA:XLK) is just 22 today compared to an elevated 96 at the height …

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Has Momentum Investing Lost its Mojo?

Former high flying industry sectors like biotech (NASDAQGIDS:IBB) and social media stocks (NYSEARCA:SOCL) have crashed between 14-16% over the past month. Have hot momentum stocks lost their mojo? One proxy of momentum stocks is the iShares MSCI USA Momentum Index ETF (NYSEARCA:MTUM). The fund owns 100-150 large and mid-cap U.S. stocks that are screened for …

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Frontier Markets: Investors Double Up on Risk

Money is flowing out of risky emerging market stocks (NYSEARCA:VWO), and guess where it’s going? Into even riskier frontier market debt and stocks (NasdaqGIDS:PMNA). The Economist reports: “Investors in America and Europe were hungry to buy dollar-denominated debt offering juicy yields. Zambia drew $12 billion of orders for a ten-year bond paying only 5.4%. Pension-fund …

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Smart Beta Investing: New Paradigm or Word Trick

Is so-called smart beta investing a new and improved way to invest or just another one of Wall Street’s fancy sales pitches? Smart beta strategies (formerly known as “fundamental indexing”) in the investment world generally fall into two camps: 1) Indexes that use a one-dimensional or simple formulas, like equal weighting all the stocks within a benchmark like the …

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Government Overspending is Fueling Debt Boom

Each month, our Mega Investment Theme Report organizes the order of major events by their impact and importance. And swelling sovereign debt (NYSEARCA:BWX) continues to be a stubborn trend that has made every single report. In Ernest Hemingway’s classic novel, “The Sun Also Rises” someone asks the character Mike Campbell how he went bankrupt. He quips: “Gradually, then …

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The First Inning of China’s Bear Market

Never mind China’s reputation for cooking the books; its raw uncooked economic data is sagging. China’s unexpected drop of 18.1% for February exports was the biggest decline in Chinese exports in almost five years and its biggest trade deficit ($23 billion) in two years. (Analysts, that over-optimistic bunch, had forecasted a 7.5% rise.) In January, …

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